Navigating the AI frontier

Navigating uncertainty in the business environment is something the Scottish legal profession has been dealing with, off and on, for decades. Yet, the emergence of artificial intelligence as a technological marvel is unparalleled. It is not just an incremental change; rather it is transformational, simultaneously reshaping established models and introducing unexpected shifts, altering the core manner in which legal practices will operate, calling for a close assessment and determined action in response. This paper aims to illuminate the intricacies and challenges across the spectrum of the profession.

From data analytics to pursuit of justice

To succeed in the legal field, solicitors need accurate collection of legal data (resources such as case law, statutes, regulations etc), streamlined processing and comprehensive analysis, which collectively serve as the foundation for informed advice and skilled problem-solving. But the immense volume and diversity of legal data cannot be managed by humans alone. AI can play a crucial role in sorting these substantial datasets into valuable and accurate segments of information, critically simplifying legal tasks. Its assimilation of primary materials is the bedrock for leveraging AI’s transformational capabilities in research, case management, and content creation.

AI is not new to the legal ecosystem. It has been steadily making its presence felt in recent years, offering a range of tools and solutions that have progressively revolutionised various facets of legal practice and research. Extractive AI technologies (which select and retrieve relevant information from a larger dataset) have been instrumental in facilitating efficient research, when using Westlaw or LexisNexis for example. The integration of AI in e-discovery platforms like Nuix or Luminance has significantly streamlined the process of identifying essential electronic information in litigation, contract management and public inquiries. Legal knowledge management platforms have advanced the organisation of large amounts of proprietary information into easily navigable formats.

However, it has been the unexpected surge of generative AI (AI that can create new data samples similar to a given dataset) that has unleashed a seismic shift, generating fascination and scepticism in equal measure. Spearheading this change are AI legal assistants like CoCounsel, Harvey AI, Lexis+ AI or Westlaw Precision, which leverage natural language processing, machine learning and data analytics into intelligent legal search engines equipped with chatbot interfaces, capable of providing plausible responses to a multitude of legal prompts. Moreover, forthcoming integrations, such as the Thomson Reuters and LexisNexis plugins with Microsoft 365 Copilot, have emerged as game-changers, facilitating seamless and efficient document creation, editing, and a validation process, within the familiar structure of Microsoft Word.

Over the spectrum of services that law firms provide, commoditised offerings, including the handling of deeds or standardised business contracts, stand to benefit directly from AI implementation. The more considerable challenge is the realm of bespoke services which require exhaustive scrutiny of legal texts, statutes, sector-specific regulations, and even deeply technical subjects that defy straightforward quantification. These specialised services demand the expertise of both seasoned and junior lawyers, as well as paralegals. The true value here is dictated less by the cumulative hours spent, but rather the strategic approach towards prospective outcomes. While lawyers should stay in the driver’s seat, AI technology has the potential in this area to act as a solid backbone in crafting strategies and ultimately estimating the likelihood of a positive outcome.

AI undoubtedly opens up avenues for improvements in productivity, accuracy and operational efficiencies. The role of both extractive and generative AI goes beyond merely providing a shortcut to the answer: it serves as a potent instrument in enriching the quality of outcomes, fostering a deeper understanding and anticipation of client needs, and thereby enhancing the comprehensiveness and sophistication of the responses generated. Just as the arrival of computer technologies revolutionised architecture in the 1970s, transitioning from laborious hand drawings to efficient CAD software, the legal sector is on the brink of a similar transition through the integration of AI, promising not only improved productivity and efficiency but also the potential to fundamentally rethink and enhance solutions to complex legal queries and client needs.

This sudden tech emergence has catapulted the legal system into uncharted territory. The immense potential of generative AI stands poised to revolutionise legal practices, promising not only efficiency but perhaps a new paradigm in legal problem-solving. Simultaneously, it casts a spotlight on a series of profound ethical dilemmas – issues surrounding bias, fairness, data privacy, and accountability are brought sharply into focus. Steering through this intricate terrain, a paramount objective emerges: to forge a symbiotic relationship between AI’s innovative prowess and the principles of justice and ethical practice – a future where technology serves not as a replacement but an enhancement to human expertise, facilitating a richer, more nuanced approach to the pursuit of justice.

AI and the legal landscape in Scotland

A recent survey by LexisNexis on the future of the legal profession offers a critical insight into the perceptions surrounding the adoption of generative AI. A significant majority of lawyers (87%) are not only aware of these advances but anticipate a substantial impact on the nature of legal practices. In tandem, Goldman Sachs recently projected that 44% of current legal tasks could be automated by AI (the all industries average is 25%). This does not mean that generative AI heralds the demise of the legal profession, more that those who do not use AI may be displaced by those who do.

Transposing these findings onto Scotland’s distinctive legal fabric, we need to take into account its particular nuances. The robust and well established infrastructure of the legal profession presents a diversified canvas for the implementation of AI, with the impacts varying considerably based on the size and structures of individual firms.

Sole practitioners and small firms

Small law firms and sole practitioners, who often bill clients either by the hour or based on the particular case, are likely to gravitate towards AI solutions that offer both cost efficiency and effectiveness in streamlining their operations. These firms typically have the ability to adapt quickly and integrate new technologies, including both extractive and generative AI tools, to enhance their capabilities without incurring substantial investment. Tools like legal assistant chatbots present a viable and cost-effective strategy for enhancing operational efficiency. The Microsoft 365 integrations mentioned above could significantly enhance the operational efficiency and competitive edge of these smaller firms.

This integration positions them favourably in a rapidly evolving legal landscape. Such advances can potentially level the playing field, allowing these firms to compete with independent medium-sized firms boasting substantial teams of associates and paralegals. By embracing AI innovation, smaller entities could redefine their competitive edge for both commoditised and non-commoditised offerings, enabling them to offer services akin to those provided by larger firms but with a personal touch.

International and UK-wide firms

The largest firms are not insulated from the disruptive dynamics that are influencing their smaller counterparts. In fact, the corporations they serve, increasingly expect them to spearhead the implementation of AI technologies in the interests of innovation and efficiency. Given that their clientele primarily comprise major corporations with in-house legal teams, these firms must re-evaluate their pricing models to ensure they accurately reflect the value of their work product. Failing to do so could incentivise corporate clients to further embrace AI technologies internally, retaining more matters in-house and minimising their reliance on external firms.

In this context, AI emerges as a potent tool, enhancing productivity in three significant ways: first, by expediting large-scale data analysis and document reviews; secondly, by executing non-billable administrative tasks with greater precision; and finally, developing custom tools, such as templates and legal styles. While a few firms have launched a proprietary large language model (“LLM”), most are (at least initially) partnering with global legal intelligence platforms.

These firms stand to bolster their positions through the adoption of AI technology, potentially expanding their competitive edge over mid-sized independent counterparts. Leveraging their substantial resources, they can fully harness AI’s capabilities, revolutionising service delivery with unparalleled speed and efficiency. Consequently, AI emerges as a double-edged sword in the Scottish legal system: propelling small firms to a more competitive stance, while potentially giving larger firms a dominating stronghold. This twofold impact is poised to reshape the competitive legal marketplace in Scotland, ushering in fresh dynamics and opportunities.

Independent (medium-sized) firms

In recent years, many leading players in the Scottish legal market have been acquired by international firms seeking a foothold in Scotland. This shift has carved out opportunities for medium-sized independent domestic firms to potentially emerge as market frontrunners. Nonetheless, the arrival of AI technologies threatens to disrupt this competitive landscape, requiring these firms to adapt and innovate to maintain their position.

Unlike their international counterparts, independent Scottish firms cannot leverage economies of scale. They also lack the agility that characterises smaller, more adaptable firms. This puts them in a kind of pinch, caught between the innovative capabilities of both small and large firms. Moreover, their dependence on service contracts with corporate and government legal departments might be jeopardised as these clients begin to adopt AI technologies themselves, potentially reducing the volume of work outsourced. These firms may therefore find themselves facing an uphill battle in a market that favours technological adaptability and efficiency.

Additionally, the development of AI capabilities seems to be primarily geared towards either small/sole practitioners or large international firms. Utilising solutions designed for smaller firms will not suffice for the medium-sized independents, and the absence of substantial economies of scale prevents them from implementing proprietary LLMs or fine-tuning existing intelligent platforms.

A feasible solution might involve further consolidation within the Scottish legal marketplace. Recent mergers between well known firms hint at the potential benefits, primarily in fostering efficiency and productivity gains. However, achieving economies of scale alone is not a silver bullet. Leaders of these firms must escalate AI integration on their agenda, adopting a visionary approach to fully unleash AI’s operational and profit potential. This involves a proactive stance in identifying areas ripe for improvement, factoring in their unique client mix and the collective talent within their organisations, rather than succumbing to a passive, wait-and-see approach. To truly thrive, they need to pinpoint and pursue the most promising opportunities that AI affords for their business growth.

Wanted: visionaries

The integration of AI in the Scottish legal ecosystem marks a transformational period, promising enhanced efficiency but also presenting pressing ethical concerns. The market is at an intriguing juncture, with different firms facing distinct prospects and challenges brought about by this technological shift. While small firms and large international firms can both potentially benefit from AI’s capabilities, independent firms may find themselves at a crossroads, grappling with challenges that require innovative strategies to survive. Now more than ever, a visionary approach is required to navigate this complex terrain and integrate technology and human expertise to achieve ethical practices. The coming years will witness a dynamic reshaping, steering the profession towards a future that balances tradition with innovation in an ever more digitised era.